Senate Set To Debate Financial Reform Bill: Corporate Governance and Executive Compensation Update

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On March 15, 2010, U.S. Senator Chris Dodd, chairman of the Senate Banking Committee, released the second version of his comprehensive financial reform bill (the first was released last fall). On March 22, the Banking Committee voted the bill out of committee; it will now be debated and amended by the full Senate. Titled the “Restoring American Financial Stability Act of 2010” (RAFSA), the bill contains sweeping changes to the financial sector. Among the headline items are proposals to:

1) make the Federal Reserve responsible for bank holding companies with assets exceeding $50 billion; 2) establish a body within the Federal Reserve to police systemic risk and grant it the power to break up “too big to fail” institutions; 3) create a Consumer Financial Protection Bureau to assess financial products; 4) require large financial institutions to prepare their own dissolution plans; 5) create an agency to regulate rating agencies; 6) increase regulation of hedge funds that manage over $100 million of assets; and 7) require more public disclosure of derivatives.

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